VUG vs VOOG – Which Growth Fund Is Better?

AN OVERVIEW OF VUG VS VOOG

Vanguard Growth ETF
(VUG)
S&P 500 Growth ETF
(VOOG)
Benchmark IndexCRSP US Large Cap Growth IndexS&P 500 Growth Index
Management StylePassive IndexPassive Index
Inception Date26 Jan 200407 Sep 2010
Expense Ratio0.04%0.10%
Number of Stocks257231
% of 10 largest holdings45.05%49.15%
AUM$66.8 B$4.9 B
Dividend Yield0.62%0.76%
as of 01/31/2021
Source: advisors.vanguard.com

Vanguard funds are known for their low cost ETF. So it is no surprise that both these ETFs have some of the lowest expense with the VUG at 0.04% and VOOG at 0.10%. This means that for every $10,000 you invest, you are only paying $4 and $10 respectively each year in management expenses.

Both these ETFs has low dividend yield, with VUG at 0.62%, and VOOG at 0.76%. This is expected because both these ETFs focuses on Growth companies. Growth companies usually retain their a large portion of their earnings for company growth and expansion, instead of distributing it to shareholder as dividend.

The main difference is that VUG tracks the CRSP US Large Cap Growth Index where the median market cap is at $235.8B , whereas VOOG tracks the S&P 500 Growth Index where the median market cap is at $316.6B.

Top 10 Holdings

Vanguard Growth ETF
(VUG)
S&P 500 Growth ETF
(VOOG)
Apple Inc. (AAPL)
11.03%
Apple Inc. (AAPL)
12.62%
Microsoft Corp. (MSFT)
9.13%
Microsoft Corp. (MSFT)
10.01%
Amazon.com Inc. (AMZN)
7.55%
Amazon.com Inc. (AMZN)
8.27%
Facebook Inc. (FB)
3.57%
Facebook Inc. (FB)
3.91%
Tesla Inc. (TSLA)
2.91%
Tesla Inc. (TSLA)
3.19%
Alphabet Inc. (GOOGL)
2.86%
Alphabet Inc. (GOOGL)
3.14%
Alphabet Inc. (GOOG)
2.67%
Alphabet Inc. (GOOG)
3.03%
Visa Inc. (V)
1.94%
NVIDIA Corp. (NVDA)
1.92%
Mastercard Inc. (MA)
1.72%
PayPal Holdings Inc. (PYPL)
1.63%
NVIDIA Corp. (NVDA)
1.67%
Adobe Inc. (ADBE)
1.43%
45.05% of total asset49.15% of total asset
as of 31/12/2020
Source: advisors.vanguard.com

The top 10 holdings for these 2 ETFs makes up almost half of the total asset. From the table we can also see that majority of top 10 companies are tech companies.

Top 5 Sectors

VUGVOOG
Technology
(46.96%)
Information
Technology
(41.93%)
Consumer Discretionary
(23.07%)
Consumer Discretionary
(17.54%)
Industrials
(12.18%)
Communication Services
(13.78%)
Health Care
(8.63%)
Health Care
(12.14%)
Real Estate
(2.71%)
Industrials
(5.24%)

ARE THERE OVERLAPPING COUNTERS BETWEEN THESE 2 ETFS?

Out of the 257 companies in VUG, 155 of these also exist in VOOG. This means that there are 102 companies are unique to VUG.

What is interesting when we look at the non overlapping counters between these 2 ETFs is that, for VUG, majority of the companies are in the tech sector. Whereas for VOOG, they consists more of the traditional non tech companies.

VUG non overlapping counters
as of 12/31/2020
VOOG non overlapping counters
as of 12/31/2020

VUG vs VOOG – Performance

Using the Portfolio Visualizer to back test these 2 ETFs, we can then compare the portfolio growth between Jan 2011 – Jan 2021. The time period was constrained by the available data for VOOG (Vanguard S&P 500 Growth ETF).

VUG vs VOOG Portfolio Growth

This is what you will end up with at the end of Jan 2021 if you have invest $10,000 in 2011.

VUG (Vanguard Growth ETF): $46,221
VOOG (Vanguard S&P 500 Growth ETF): $45,078

These 2 ETFs has similar growth based on the chart above.

VUG vs VOOG Annual Returns

Between the 10 years period, there is only one year where both funds have negative returns. In 2008, VUG had a loss of 3.31% vs VOOG’s 0.22%. We can also see that in 2019 and 2020, VUG returns approx. 7% more than VOOG.

Annualized Returns

1 Year3 Year5 Year10 year
VUG40.16%22.98%20.33%16.67%
VOOG33.33%20.37%18.82%16.33%
as of 31/12/2020
Source: advisors.vanguard.com

VUG VS VOOG – WHICH GROWTH FUND IS BETTER?

Based on past 10 years performance, VUG performs slightly better than VOOG. And VUG also has a lower expense ratio.

When we look at the funds that aren’t overlapping, VUG contains more Tech companies than VOOG. We are starting to see the widening gaps in returns between these 2 ETFs from 2019 onwards. This could be due to the fact that VUG has a lot more growing tech companies in their list compared to VOOG.

Personally, I like VUG too for the same reason. I just don’t see other sectors perform as well as the tech sector in the coming years.

As always, remember that Past Performance is No Guarantee of Future Results.